How to Pitch Angel and VC Investors: 10 Tips on Communicating Traction

I went to a class last week taught by Brendan Baker of Greylock and Hiten Shah of KissMetrics on how to communicate traction to investors. I won’t bore you with their backgrounds, but trust me, these guys absolutely know their stuff.

Here are ten things I learned about how investors think and what they are looking for in a pitch.

(1) Investors respond to a story.

Don’t talk about how your product works. Tell them how well the business is going.

It is YOUR story of momentum told though quantified evidence that shows a path to world domination

Good examples of quantified evidence in order from best to worst: profits; revenues; active users; engagement; customers/clients; registered users; downloads; partnerships; traffic.

If you can show that your startup is profitable or cashflow break even, you are golden in the eyes of investors (assuming of course that you didn’t simply achieve profitability by cutting costs so much as to stifle growth).

(3) Just because you got featured on TechCrunch doesn’t mean people are going to invest.

Investors do not view press and testimonials as good examples of traction. According to Brendan, “every shitty startup can get good press and glowing testimonials.”

Baker’s Rule: Actual progress is inversely proportional to the amount of times you use these words in your pitch: gamechanger, visionary, next-generation, seasoned professional, groundbreaking, innovative, disruptive.

Pitch decks with fluffy language get tossed in the trash.

(6) As an add-on to the above list, don’t tell investors that your product is “inherently viral”.

(7) If you have a weakness, address it up front. Be blunt and get it out of the way.

For example, investors often don’t like investing in husband and wife teams. If you are a husband and wife team you might start off your pitch by just laying it out in the open: “We’re a husband and wife team. If this is a problem for you, let us know now.”

(8) Don’t put up graphs without annotation.

You need to tell a story. Graphs without annotations don’t tell a story.

(9) Be clear and concise in communicating your traction.

For example, let’s say you pitched an associate and she liked you. In order to get the next meeting, she has to be able to clearly communicate your message to the partners at the firm. You win when you make her job easy. Think about it this way: if she had just one minute to describe your status and progress to a partner, what would you want her to say?

(10) Pitch and iterate.

The more you pitch, the more you get a sense for what parts of your pitch resonate with investors. Keep the parts that work and ditch the parts that don’t. Keep iterating until you nail it.

“For example, investors often don’t like investing in husband and wife teams.”

Ooooh, ummmm… that could be a problem with our future startup. If investors tend to be prejudiced against husband & wife teams, did they say how to mitigate the risk? (I suppose we could get divorced……nah)

I don’t know if there is a way to mitigate the risk per se. Some investors will be okay with it and some won’t. I think you just have to find the ones who are cool with it or have invested in husband/wife teams in the past.

I am in the middle of raising money for a new start-up called CaseNetwork (www.casenetwork.com). I have pitched 6 VCs and 20 angels over the last 10 weeks and I am starting to get traction. I would say that your top 10 list is right on the money. Momentum and communication have been key for me. You are definitely right about the pitch. Mine is more refined every time I give it. Thanks for the post. I will share it with my colleagues.

Glad to hear it. But all the credit goes to Brendan and Hiten. I just summarized what they said in the class. Good luck with the rest of your round. When you’re finished if you have any additional tips, please feel free to share in the comments.

[…] Highlight your traction. By the time we applied, we had already processed $1 million in donations on our site and had received a number of nice stories in the media. If you have any traction whatsoever, don’t be bashful about highlighting it in your application. Put it at the very top with gold stars around it. According to feedback we got from the director of Excelerate, the $1 million in processed donations was the number one reason we were accepted. […]

[…] $1 million in donations on our site and had received a number of media hits. If you have any traction whatsoever, highlight it in your application. Put it at the very top with gold stars around […]

[…] made as a company.Here are four tips based on our experience that can help you improve your chances:Highlight your traction. By the time we applied, we had already processed $ 1 million in donations on our site and had […]

[…] Highlight your traction. By the time we applied, we had already processed $1 million in donations on our site and had received a number of nice stories in the media. If you have any traction whatsoever, don’t be bashful about highlighting it in your application. Put it at the very top with gold stars around it. According to feedback we got from the director of Excelerate, the $1 million in processed donations was the number one reason we were accepted. […]

Hi there would you mind sharing which blog platform you’re using? I’m looking to start my own blog soon but I’m having a tough time making a decision between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your layout seems different then most blogs and I’m looking
for something completely
unique. P.S Sorry for getting off-topic but
I had to ask!

[…] Highlight your traction. By the time we applied, we had already processed $1 million in donations on our site and had received a number of nice stories in the media. If you have any traction whatsoever, don’t be bashful about highlighting it in your application. Put it at the very top with gold stars around it. According to feedback we got from the director of Excelerate, the $1 million in processed donations was the number one reason we were accepted. […]